CBAM and digital solutions: How can they help businesses?

General

Please note that this FAQ document focuses on the transitional period of the Carbon Border Adjustment Mechanism (CBAM), which entered into force on 1 October 2023. However, some questions also address the definitive period that will begin in January 2026.

Why is the European Union (EU) establishing a Carbon Border Adjustment Mechanism (CBAM)?

The EU is a global leader in the fight against climate change. The European Green Deal sets out a clear goal of a 55% net reduction in greenhouse gas emissions by 2030 (compared to 1990 levels) and climate neutrality by 2050. In July 2021, the Commission presented the “Fit for 55” policy package to turn these targets into reality, strengthening the EU’s position as a global climate leader. Since then, these policies have been shaped through negotiations with the European Parliament and the Council, and many are now part of EU law.

CBAM, as part of this framework, will prevent the weakening of climate action by addressing carbon leakage — the risk of companies moving production to countries with less strict climate policies.

What is the current stage of CBAM implementation?

The European Parliament and the Council signed Regulation (EU) 2023/956 on 10 May 2023.The transitional phase began on 1 October 2023, with the first quarterly reports due by 31 January 2024.

The detailed rules for reporting emissions during this period are defined in Implementing Regulation (EU) 2023/1773. The Commission has also set up a CBAM registry, prepared additional secondary legislation, and is conducting planned analyses. The definitive phase will begin in January 2026.

The European Commission provides detailed guidance for the transition phase, including manuals, webinars, e-learning materials, and other resources, available on the CBAM website.

How does CBAM work?

CBAM is designed to comply with World Trade Organization (WTO) rules and other international obligations of the EU. It mirrors the EU Emissions Trading System (EU ETS) and works as follows:

• CBAM applies to the actual embedded emissions in imported goods, determined using methods equivalent to those used under the EU ETS for similar products produced within the EU.

• From 2026 onward, EU importers will need to purchase CBAM certificates corresponding to the carbon price that would have been paid if the goods had been produced under the EU ETS.

• If a non-EU producer has already paid a carbon price in their home country for the embedded emissions of the imported product, this cost will be deducted from their CBAM obligation.

Thus, CBAM will reduce the risk of carbon leakage, encourage cleaner production in non-EU countries, and promote the introduction of carbon pricing mechanisms globally.

To ensure legal certainty and a smooth transition, CBAM is being introduced gradually, initially covering a limited number of high carbon leakage risk sectors:iron and steel, cement, fertilizers, aluminium, hydrogen, and electricity generation.

During the transitional period (starting 1 October 2023), only reporting is required — no financial adjustment applies until 2026.

How does CBAM interact with the EU ETS?

The EU ETS is the world’s first international emissions trading system and the EU’s main climate policy tool. It caps total emissions from energy production and large industrial facilities. While companies can buy or receive emission allowances, certain sectors receive free allowances to reduce carbon leakage risks.

CBAM will gradually replace free allowances for covered sectors starting in 2026. The number of free allowances will decline until 2034, ensuring fair treatment between EU producers and importers.

CBAM certificates’ price will reflect the EU ETS carbon price, but unlike ETS allowances, there will be no quantitative limit on CBAM certificates.

How does CBAM interact with other ETS systems outside the EU?

CBAM ensures no less favorable treatment for imported products compared to EU products, through three design features:

1. It takes into account actual embedded emissions, rewarding decarbonization efforts by foreign producers.

2. The price of CBAM certificates mirrors the EU ETS price.

3. Any effective carbon price paid abroad is deducted to avoid double pricing.

Before the end of the transition period, the Commission will adopt secondary legislation setting out the process for recognizing foreign carbon pricing schemes.

During the transition, reports should include any carbon price paid in the country of origin.

Which sectors are covered and why were they chosen?

CBAM initially applies to imports of:

• Cement

• Iron and steel

• Aluminium

• Fertilizers

• Hydrogen

• Electricity

These sectors were selected due to their high carbon intensity and carbon leakage risk. Together, they represent over 50% of emissions covered by the EU ETS. CBAM may later extend to other sectors.

Which products are covered by the CBAM Regulation?

CBAM applies to products listed in Annex I of the Regulation, defined by CN (Combined Nomenclature) codes derived from HS codes.

For example, ammonia (CN code 2814) falls under the fertilizers sector, even if it is not used for fertilizer production.

Does CBAM apply to ‘second-hand’ or ‘returned’ goods?

CBAM applies to all goods imported into the EU customs territory.Returned goods of EU origin are exempt from CBAM since they are not considered third-country imports.

Does CBAM apply to outermost EU regions (e.g., Mayotte, La Réunion)?

No. CBAM applies only to goods imported from third countries into the EU customs territory.Since Mayotte and La Réunion are part of the EU customs territory, CBAM does not apply to goods produced there.

Which third countries are covered?

In principle, CBAM applies to all non-EU countries, except those participating in or linked to the EU ETS, such as the EEA countries and Switzerland.

Electricity imports may also be exempt if the exporting country integrates its electricity market with the EU and commits to equivalent decarbonization and carbon pricing measures.

Are imports from the United Kingdom subject to CBAM reporting?

Yes, during the transitional phase, embedded emissions in products originating from the United Kingdom must be reported.

What happens during the transitional period?

From 1 October 2023 to 31 December 2025, importers (or indirect customs representatives) must report the embedded emissions of imported CBAM goods quarterly.No financial adjustment applies during this period.

The first CBAM report was due 31 January 2024 (covering Q4 2023).

Are there penalties for non-compliance?

Yes. Failure to report embedded emissions from 1 October 2023 onwards may result in penalties of EUR 10–50 per ton of unreported emissions.

Penalties apply if:

• The declarant fails to submit a CBAM report, or

• The report is incorrect or incomplete, and the declarant does not correct it after being notified by the competent authority.

Where can I find detailed information on reporting embedded emissions?

All information is available in Implementing Regulation (EU) 2023/1773.

The European Commission has also published guidance documents — one for EU importers and one for non-EU producers — as well as an optional communication template (Excel file) to facilitate data exchange.Documents are available on the CBAM website:🔗 https://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanism_en

Is it mandatory to use the Excel communication template?

No, it is not mandatory but strongly recommended.The template aligns with Implementing Regulation (EU) 2023/1773 and helps companies calculate embedded emissions by listing relevant input flows, emission sources, electricity consumption, and precursors.

It includes a “Summary_Communication” worksheet to facilitate information exchange between importers and third-country producers.

Who is responsible if incorrect or incomplete information is submitted?

The declarant (importer or indirect customs representative) is responsible.National competent authorities are responsible for enforcement and may impose penalties.

Who can I contact for further or more specific questions?

You can contact your national competent authority or the European Commission for clarification.The list of national authorities is available on the official CBAM website:🔗 Carbon Border Adjustment Mechanism (europa.eu)koşulları karşılamalıdır (952/2013 sayılı Yönetmeliğin 18. maddesine bakınız).

Can an importer have more than one indirect customs representative?

Yes. The importer is free to use multiple indirect customs representatives, each responsible for the specific CBAM goods they include in a customs declaration. Each representative will indicate their own EORI number in the customs declaration, which serves as proof of who is responsible for the embedded emissions. Therefore, double counting of embedded emissions is not possible.

Will companies be allowed to report centrally if their subsidiaries in different Member States have different EORI numbers?

In principle, CBAM goods are attributed to the CBAM declarant via the EORI number provided to customs authorities. This means that, by default, CBAM reports will be made separately for different subsidiaries with different EORI numbers.

However, since importers are allowed to appoint indirect customs representatives to assume CBAM obligations, a single indirect customs representative may be appointed to represent all subsidiaries and report centrally.

What are the reporting obligations? When should the report be submitted?

During the CBAM transition period (from 1 October 2023 to 31 December 2025), importers must submit a CBAM report every quarter. The report must cover information on goods imported during the previous quarter and must be submitted within one month after the end of that quarter.

Reporting Schedule:

Reporting Period	Submission Deadline
2023: Oct – Dec	31 Jan 2024
2024: Jan – Mar	30 Apr 2024
2024: Apr – Jun	31 Jul 2024
2024: Jul – Sep	31 Oct 2024
2024: Oct – Dec	31 Jan 2025
2025: Jan – Mar	30 Apr 2025
2025: Apr – Jun	31 Jul 2025
2025: Jul – Sep	31 Oct 2025
2025: Oct – Dec	31 Jan 2026

The report must include the information specified in Article 35 of the Regulation:

• The total quantity of each type of CBAM good;

• The total actual embedded emissions;

• The total indirect emissions;

• The carbon price effectively paid in the country of origin (including any rebates or compensations applicable).

I import very small quantities of CBAM goods. Are these still covered by the CBAM Regulation?

Small quantities of CBAM goods may be automatically exempt from the Regulation under the de minimis exemption.The de minimis exemption applies when the total intrinsic value of the CBAM goods in a shipment does not exceed €150.

• Example 1: Your shipment includes several non-CBAM goods and one package of Portland cement (CN 2523 21 00) valued under €150 → de minimis applies.

• Example 2: Your shipment includes one ton of Portland cement (CN 2523 21 00) and one ton of other Portland cement (CN 2523 29 00), each valued at €120 → the total exceeds €150, so de minimis does not apply.

If I did not import any CBAM goods during a quarter, do I still need to submit a report?

No. If no CBAM goods were released for free circulation during a given quarter, no CBAM report is required for that quarter.

Reporting: Responsibilities and Procedures

What is the role of the European Commission during the transition period?

During the transition period, the Commission will:

• Manage the CBAM Transitional Registry;

• Transmit lists of non-compliant reports to national competent authorities (NCAs);

• Monitor CBAM implementation, progress, and risks;

• Analyze its impacts on exports, downstream products, trade flows, and least-developed countries (LDCs).

It will also adopt secondary legislation to implement specific provisions at different stages (2023–2025), including:

• Reporting and IT infrastructure (Art. 35);

• Accreditation, verification, indirect emissions (Annex IV);

• Carbon price paid, customs data, average ETS price, CBAM declaration, and free allocations.

By 2025, the Commission will also establish a Central Platform for certificate sales and repurchases in the definitive phase.

What is a National Competent Authority (NCA)?

Each Member State has designated an NCA responsible for enforcing Regulation (EU) 2023/956.NCAs check the quality of CBAM quarterly reports (with Commission support), contact non-compliant declarants, and may impose penalties.From 2025, they will also grant the status of “Authorized CBAM Declarant.”

A list of NCAs is available on the official CBAM website: Carbon Border Adjustment Mechanism (europa.eu).

Do importers need to be ‘authorized’ to import CBAM goods during the transition period?

No. During the transition period, importers do not need prior authorization to import CBAM goods. Customs authorities will inform them about reporting obligations at the time of import.

Are there verification requirements during the transition period?

No. Independent third-party verification will only become mandatory from 2026 onward. The verification rules for the definitive system will be based on data collected during the transition period.

What supporting documents are required for the quarterly CBAM report?

No original documents are required to be submitted. The declarant must provide the required information via the CBAM Transitional Registry only.However, under Annex III, Section A.2 of the Implementing Regulation, all supporting records and documents used to determine embedded emissions must be kept for at least four years and made available upon request.

I am both an importer and an indirect customs representative for another importer. Should I submit one or two CBAM reports?

Only one CBAM report is required.If a declarant acts both as importer (Company A, importing steel) and as indirect customs representative (for Company B, importing aluminum), they must submit a single quarterly report covering all CBAM goods for which they filed customs declarations.

What is meant by the “effective carbon price” reported?

The “carbon price” refers to the monetary amount paid in a third country under a carbon emission reduction scheme (tax, fee, charge, or ETS-type system) based on the greenhouse gases emitted during production.During the transition period, declarants must report the effective carbon price paid in the jurisdiction of production. In the definitive phase, this will allow importers to claim a deduction to prevent double carbon pricing.

Who will verify the accuracy of the data and reports?

Under Article 11 of the Implementing Regulation, the Commission performs an initial screening of CBAM reports and forwards incomplete or suspicious ones to the relevant NCA.The NCA may then initiate a review and corrective procedure, which can ultimately lead to penalties.

Can a previously submitted CBAM report be corrected?

Yes. Article 9 of the Implementing Regulation allows corrections up to two months after the end of the reporting period.For the first two reports, this period was extended — corrections were allowed until 31 July 2024.

Is reporting limited to English, or are other languages accepted?

Reporting is possible in all 24 official EU languages.

What is the CBAM Transitional Registry?

To ensure effective implementation of reporting obligations, the Commission developed an electronic database — the CBAM Transitional Registry — for collecting reported information during the transition period.It provides a standardized, secure electronic system for access, submission, and confidentiality management.

Access link:🔗 https://customs.ec.europa.eu/taxud/uumds/cas

What will the CBAM Transitional Registry be used for?

The Registry will facilitate communication between the Commission, NCAs, customs authorities, and declarants.It serves for data collection and analysis, not enforcement.

Is the CBAM Transitional Registry the same as the EU Customs Trader Portal (EUCTP)?

No, it operates independently.However, depending on the Member State, existing customs user accounts may be used for CBAM access, or a separate CBAM module may be required.

Will the data shared in the CBAM Transitional Registry remain confidential?

Yes. Under Article 14 of the CBAM Regulation, all information in the Registry is confidential except for company names, addresses, contact details, and locations of third-country installations.NCAs and the Commission are bound by professional secrecy regarding data collected.

How can I register as a CBAM declarant and access the CBAM Transitional Registry?

Economic operators wishing to act as CBAM declarants must apply to their National Competent Authority (NCA).NCAs are responsible for granting access to the CBAM Registry and providing login credentials.Depending on the Member State, either existing customs credentials or new CBAM-specific accounts will be required.

How many CBAM Transitional Registry environments exist?

Two:

1. Production environment – for official reporting;

2. Conformance (test) environment – for training and testing.

Both require separate registration for security reasons.

• Production Registry: https://cbam.ec.europa.eu/declarant

• Conformance Registry: https://conformance.cbam.ec.europa.eu/declarant

Who is authorized to register a company as a CBAM Declarant?

Any individual who can prove representation authority of the company may apply to the NCA for access as a CBAM Declarant.The NCA verifies legitimacy and grants access credentials. The account holder is responsible for safeguarding credentials and managing sub-accounts for employees.

The English translation is as follows:

Can companies that are not directly subject to the CBAM access the CBAM Transitional Registry?

No, access to the CBAM Transitional Registry is limited to the reporting declarants, the competent authorities in the Member States, customs authorities, and the European Commission.

How should data be filled in the CBAM Transitional Registry?

Quarterly reports must be filled in per importer, per CN code, and per installation. There are two ways to fill in the data in the CBAM Transitional Registry:

• Reporting declarants can manually fill in the data within the CBAM Transitional Registry interface.

• Alternatively, reporting declarants can use an XML structure to upload their CBAM quarterly reports. Once an XML file is successfully uploaded, a new draft quarterly report is created and can be submitted via the CBAM Registry user interface. A supporting XLS file that can be used to populate the quarterly report using XML will be published soon on the Commission's CBAM website.

There are mandatory and optional fields. The mandatory fields in the CBAM Transitional Registry are marked with an asterisk (*). The mandatory fields are also indicated in the supporting XLS file.

Detailed information on how to fill in the report and how to use the XSD file can be found in the CBAM Transitional Registry user guide for Declarants. A draft report can be saved even if all mandatory elements are not provided. However, all mandatory elements must be provided to submit the report.

What is the methodology for calculating embedded emissions in CBAM goods during the CBAM Transitional Period?

What is the relevant time period for calculating embedded emissions? Can data from previous years be used?

The default reporting period, i.e., the reference period for operators to determine embedded emissions, is a calendar year. However, the use of other periods (e.g., the year of the product) that provide similar coverage and cover at least 3 months may be justified. Further details can be found under Section 4.3.4 of the Guidance documents (for EU importers) / Section 4.3.3 (for non-EU installations).

For the CBAM report to be delivered in the first quarter of the year, data from the previous year should be used. Where such data is not yet available by the end of January/February, data from the penultimate year may be used.

What are simple and complex goods?

There are two types of CBAM goods: simple and complex ones. "Simple goods" are produced from input materials whose embedded emissions are considered to be zero, according to the CBAM reporting methodology. Therefore, the embedded emissions of simple CBAM goods are only based on the emissions that occurred during their production.

For "complex goods," it is also necessary to include the embedded emissions of the relevant precursor materials used in the production process. Relevant precursor materials refer to raw materials that are themselves a CBAM product and are used in the production of complex CBAM goods. In the cement sector, an example of a precursor material is cement clinker, the main component of Portland cement.

What are direct and indirect emissions?

Direct emissions cover emissions occurring during the production processes of the CBAM goods, including the production of heating and cooling, and wherever the production of heating and cooling takes place, the relevant emissions count as direct emissions.

Indirect emissions cover the production of the electricity consumed during the production of the CBAM goods.

The embedded direct and indirect emissions of relevant precursor materials are also considered when determining the embedded direct and indirect emissions of CBAM goods.

For monitoring purposes during the transitional period, importers are required to report both direct and indirect emissions for all products covered by the CBAM. In the definitive period, starting on January 1, 2026, the CBAM scope will be limited to direct emissions for iron/steel, aluminum, and hydrogen, while importers of cement and fertilizers will have to report both direct and indirect emissions.

What is the "balloon approach" and how does it work?

If an installation produces a complex good and also produces its precursor, and this precursor is only used to produce the complex good, a combined (single) production process system boundary can be defined within the installation (see guidance documents for explanations).

If an imported CBAM good was produced using precursors produced in the EU (e.g., pig iron), should this be taken into account in the calculation?

Yes, relevant precursors produced in the EU should also be considered in determining the embedded emissions.

However, if a precursor originates from EU production, the carbon price already paid in the EU can also be reflected in the CBAM report. (More information is available in Section 6.10 of the Guidance on Carbon Trading for non-EU installations).

Will the European Commission formally or informally verify the "equivalence" of alternative methods?

The transitional period is a learning period for everyone, including the EU Commission services and national competent authorities. If alternative methods do not meet the standards set out in Article 4(2) of the Implementing Regulation, particularly after July 31, 2024, such a calculation method may be rejected. The national competent authority will initiate communication with the reporting declarant to obtain more accurate data.

How are indirect emissions determined in the production of CBAM goods?

Indirect emissions are determined by multiplying the electricity consumed to produce a CBAM good by a relevant emission factor. The emission factor can be grid-based or represent a real emission factor.

Which emission factors for electricity should be used to determine indirect emissions?

Default emission factors for electricity for the transitional period are based on International Energy Agency (IEA) data, covering a 5-year average. They are provided by the Commission country-by-country in the CBAM Transitional Registry.

Alternatively, any emission factor of the country of origin's electricity grid can be used, provided its basis is public data. Both a physical emission factor and a CO2​ emission factor can be used.

Actual electricity emission factors can be used when there is a direct technical connection between the electricity generation source and the installation producing the CBAM good, or a Power Purchase Agreement between the electricity producer and the consumer.

Can market-based certificates (Guarantee of Origin, Renewable Energy Certificates, etc.) be used to justify the use of actual emission factors?

In the transitional period, the general rule for the emission factor for electricity is to use the default values to be provided by the Commission. However, when the relevant conditions are met (i.e., the existence of a direct technical connection or a Power Purchase Agreement, as explained above), actual electricity emission factors can be used.

Market-based specific emission factors, such as those determined by Guarantees of Origin or Green Certificates, cannot be used to justify the use of actual emission factors.

More information can be found in Annex III, section D.2 of the CBAM Implementing Regulation and section 6.7.3.2 of the guidance document for non-EU installations.

Should emissions from transportation within the facility be included in the calculation?

Emissions from transport using conveyor belts, pipes, and other fixed equipment are included. Emissions resulting from the use of mobile machinery (trucks, forklifts, etc.) are excluded. These are the same rules as in the EU Emissions Trading System.

Can carbon capture and utilization (CCU) / carbon capture and storage (CCS) be used to offset emissions for the purpose of determining embedded emissions?

Carbon capture and utilization/storage (CCUS) are increasingly available techniques in the market to reduce carbon dioxide emissions. Such emission reductions can be taken into account when determining embedded emissions, but certain criteria must be met. These conditions are outlined in Annex III, section B.8.2. of the Implementing Regulation (guidance document section 6.5.6.2. offers further clarification). The conditions mainly involve cases where the captured carbon dioxide is used in the production of products where it is permanently chemically bound, or where the captured carbon dioxide is transferred to a long-term geological storage site.

My supplier does not submit the required information before the reporting deadline. What should I do?

Good cooperation between third-country producers and declarants is very important. The Commission has published guidance and templates to assist producers in determining the embedded emissions of the goods they produce.

Ultimately, the reporting declarant is the one who bears the responsibility for ensuring that the CBAM reports are complete and correct. The declarant is responsible and may be subject to penalties when the CBAM reporting obligations are not respected.

For part of the transitional period (until mid-2024), declarants can use other methods, including default values provided and published by the Commission, for each import of goods for which they do not have all the information.

The use of default values for reporting purposes during the transitional period is possible for the first three reporting periods without any quantity limitation. Furthermore, estimated values (including default values) can be used throughout the reporting period for processes or subprocesses that make a relatively small contribution to the total embedded emissions of the input materials or complex goods (i.e., <20%).

In other words, this means that up to July 31, 2024, 100% of the total embedded emissions can be determined using default values. For the remainder of the transitional period (i.e., July 1, 2024 – December 31, 2025), estimated values can be used, but a quantity limitation applies: for complex goods, up to 20% of the total embedded emissions, considering the entire production chain, can be estimated (default values provided by the Commission are considered "estimated").

At the end of 2025, the Commission will evaluate the default values based on the collected data. Only general default values (for each CN code under the CBAM scope) will be available during the transitional period. In the definitive period, default values will be provided by country or even region.

How are the default values determined and when will they be published?

The EU Joint Research Centre (JRC) published on September 29 estimated values of greenhouse gas emission intensities for products from the four energy-intensive industries (iron and steel, fertilizers, aluminum, and cement) in the EU's main trading partners. This study provides scientific support for the implementation of the mechanism as foreseen by the CBAM Regulation.

The JRC report presents the values in detail, specifying the emissions associated with the production of the listed products, as part of the production of carbon dioxide, nitrogen dioxide (for certain fertilizer products), and perfluorocarbons (for aluminum products).

The estimated values of greenhouse gas emission intensities (i.e., specific embedded emissions) are used as an input to inform the determination of default values for the transitional period, and these values will be published by the end of 2023.

For how long will EU importers be allowed to use alternative monitoring and reporting methods?

Some flexibilities are provided for the transitional period under the Implementing Regulation: until December 31, 2024, declarants can use (a) a carbon pricing scheme, (b) a mandatory emissions monitoring scheme, or (c) an in-house emissions monitoring scheme that provides similar coverage and accuracy (Article 4(2)). Until July 31, 2024, other reference methods (see Article 4(3) of the Implementing Regulation), including default values provided by the Commission, can be used in cases where the declarant does not have all the necessary information. Thus, declarants may decide to introduce additional methods of their choice until this date. These methods will then be evaluated by the Commission services to adjust the CBAM reporting methodology for the Definitive period.

How should emissions from the use of biomass be accounted for?

The CBAM methodology follows the same rules as the EU ETS.

If biomass is used as an input to a process (e.g., using coal as a reducing agent in a blast furnace or for the production of electrodes), emissions from the use of biomass are not accounted for ('zero rating'). If biomass (solid, liquid, or gaseous) is used as a fuel for energy purposes, emissions are accounted for unless the biomass meets the relevant sustainability and greenhouse gas saving criteria of the Bioenergy Directive (EU) 2018/2001. The applicable criteria depend on the type of biomass used. Annex D of the guidance document for non-EU installation operators provides more detail.

How should decimal places and rounding be handled in calculations?

All "significant" figures (in accordance with measurement uncertainty) should be retained throughout the entire calculation.

How should decimal places and rounding be handled in calculations?

All "significant" figures (in accordance with measurement uncertainty) should be retained throughout the entire calculation.

Should gross weight or net weight be used in the calculation of imported CBAM goods?

CBAM goods are measured by net weight when imported into the customs territory of the Union. Therefore, the net weight should also be used in the calculation of the embedded emissions of the CBAM goods.

How should stock items without emissions data be handled?

The embedded emissions of such stock items can be estimated using the default values published by the European Commission until July 31, 2024.

Thereafter, actual data should be reported. In the absence of data for old spare parts or stock items, data for similar or identical products can be submitted after July 31, 2024.

If a facility is used by more than one production process simultaneously, how do we attribute emissions from this facility to each production process?

All inputs, outputs, and associated emissions in a facility must be attributed to a production process, provided they are not associated with something that is not a CBAM good.

In general, the relevant emissions of a facility must be 100% covered by the production processes of the CBAM goods and, if necessary, other non-CBAM goods.

For a facility with more than one relevant production process, if shared equipment, shared 'flow of resources', or shared emission sources are relevant, the inputs, outputs, and emissions must be attributed to the different production processes with an appropriate sharing. For example, if a facility produces purified water and 60% of this water is used to produce a CBAM good, 60% of the direct and indirect emissions associated with the water treatment must be attributed to the production of the CBAM good.

Should non-saleable quality products be taken into account when determining the level of activity?

If the out-of-quality product is saleable and complies with the category of CBAM goods (as listed in Implementing Regulation (EU) 2023/1773) for the production process, it should be included in the level of activity.

Cement

Is cement defined as a complex good under CBAM?

Yes. Cement is defined as a complex good under CBAM because clinker is a precursor of cement, and clinker itself is covered by CBAM.

Fertilizers

Are exothermic chemical reactions involved in the production of fertilizers accounted for as direct emissions?

If a reaction leads to the production of $\text{CO}_2$ through the oxidation of organic chemicals and the $\text{CO}_2$ is released, it is accounted for as a direct emission.

Emissions resulting from the conversion of natural gas for hydrogen production are also considered as direct emissions.

Can $\text{CO}_2$ bound in urea be counted as negative emissions?

No. Under the EU ETS, $\text{CO}_2$ bound in urea is not counted as negative emissions. Therefore, for the purpose of reporting emissions under CBAM, no deductions apply for $\text{CO}_2$ bound in urea. This also means that $\text{CO}_2$ transferred to urea production during ammonia production is counted as an emission under ammonia production.

Electricity as a CBAM Good

Who is the person authorized to make the CBAM declaration for the import of electricity?

In general, the importer is the person indicated as the 'importer' in the customs declaration. By way of exception, and in accordance with Article 5(4) of the CBAM Regulation, where capacity allocation is explicitly made for the import of electricity, the person to whom the capacity is allocated and who nominates this capacity for the import is considered the CBAM declarant in the Member State where they declare the import of electricity in the customs declaration.

What is the difference between the electricity and $\text{CO}_2$ emission factor?

The emission factor for electricity represents the weighted average emission factor of all electricity generation sources (including nuclear and renewable sources) in a geographical area (e.g., a third country, a group of third countries, or a region within a third country). In contrast, the $\text{CO}_2$ emission factor represents the weighted average emission factor of electricity generation sources based on the combustion of fossil fuels. This means a $\text{CO}_2$ emission factor is larger than the emission factor for electricity for the same geographical area.

During the transitional period, the $\text{CO}_2$ emission factor is used as the default method to determine the specific direct embedded emissions for electricity as a CBAM good. In contrast, the emission factor for electricity is used as the default method to determine the specific indirect emissions for CBAM goods other than electricity.

Which $\text{CO}_2$ emission factors should be used?

Default values for imported electricity are calculated per third country, group of third countries, or specified location within a third country, based on the best data available to the Commission. The default values for the transitional period include $\text{CO}_2$ emission factors for each country, based on International Energy Agency (IEA) data covering a 5-year average, and are provided by the Commission in the CBAM Implementing Regulation.

When there is no specific default value, the $\text{CO}_2$ emission factor for the EU should be used. This is also based on IEA data and is provided through the CBAM Implementing Regulation.

A declarant may determine the $\text{CO}_2$ emission factor according to the method defined in the Implementing Regulation when they provide sufficient evidence based on official and public information to demonstrate that it is lower than the values specified in the points above.

What are the requirements for reporting the actual embedded emissions of electricity, i.e., what is referred to as "conditionality"?

Actual emissions data for a specific electricity-producing installation can be used if the requirements of Annex IV, Article 5 of the CBAM Regulation are met (referred to as "conditionality").

The conditions are as follows, and it is important to note that these criteria must be met in combination:

• The quantity of electricity for which the use of actual embedded emissions is requested is covered by a Power Purchase Agreement between the authorized CBAM declarant and an electricity producer located in a third country;

• It can be demonstrated that the electricity-producing installation is directly connected to the Union transmission system or that there is no physical network congestion at any point at the moment of export;

• The electricity-producing installation does not emit more than 550 grams of fossil fuel-derived $\text{CO}_2$ per kilowatt-hour of electricity produced;

• The quantity of electricity for which the use of actual embedded emissions is requested has been unequivocally nominated to the connection capacity allocated by all responsible transmission system operators in the country of origin, and the nominated capacity and the electricity production of the installation cover the same period, which must not be longer than one hour.

Are transit countries considered for electricity in CBAM?

For electricity as a CBAM good, the relevant third country is the country of origin where the electricity is produced. No emission factor for a transit country is considered in the CBAM report.

What are the system boundaries for determining the embedded emissions of electricity?

For reporting, only direct $\text{CO}_2$ emissions occurring during the production of electricity are considered. For example, upstream emissions related to the manufacture and installation of wind turbines are not considered.

Hydrogen

What is the connection between hydrogen as a CBAM good and the Renewable Energy Directive (EU) 2018/2001 ("RED II")?

The Implementing Regulation provides that "a zero emission factor for electricity may be used where the hydrogen produced is certified in accordance with the European Commission Delegated Regulation (EU) 2023/1184(1)" (Annex II, Section 3.6). This means that if the hydrogen is certified according to the Renewable Energy Directive to demonstrate that it is certified as "RFNBO" (renewable fuel of non-biological origin), a second certification is not required.

In the absence of such certification, indirect emissions must be determined in accordance with Annex III.

Iron and Steel

When calculating the embedded emissions of steel products, are auxiliary processes such as lime kilns or coke ovens included in the scope of the calculation?

The system boundaries for each aggregated product category can be found in Annex III of Implementing Regulation (EU) 2023/1773.

Lime kilns and coke ovens are not included in the system boundaries for iron and steel production. This is because the outputs of these installations (i.e., lime and coke) are not CBAM goods. Consequently, lime and coke are also not considered a precursor in the calculation of specific embedded emissions.

The production of auxiliary processes such as purified water and compressed air is included in the system boundaries.

Are iron ore pellets covered by CBAM?

Yes. Iron ore pellets fall under CN code 2601 12 00, 'Agglomerated iron ores and concentrates, other than roasted iron pyrites.' They are considered a precursor ("sintered ore") in the production of pig iron or Direct Reduced Iron (DRI).¹

Aluminium/Steel²

Should the specific embedded emissions of aluminium/st³eel products be determined separately for different alloy grades?

Specific embedded emissions are generally determined by aggregated product category, unless different production methods are used within the installation. The aggregated product categories may include products with different CN codes. Within the same CN code, the content of alloying elements or the input scrap share may vary. However, during the transitional period, embedded emissions may be reported by aggregated product category.

Businesses may voluntarily choose to determine more detailed specific embedded emissions for specific products or product groups.

Customs

Can an importer use different customs representatives for the customs declaration and CBAM reporting?

In terms of the reporting requirements applicable during the transitional period, the CBAM Regulation (Article 5) foresees the possibility for importers of CBAM goods to appoint direct or indirect customs representatives within the meaning of Article 18 of the Union Customs C⁴ode (refer to Regulation (EU) No 952/2013 for this purpose):

• In the case of direct representation, the importer established in the EU remains subject to the CBAM obligations, while the direct customs representative is the declarant of the customs declaration.

• If an importer established in the EU appoints an indirect customs representative, and the indirect representative agrees, the reporting obligations apply to this indirect customs representative.

• If the importer is not established in an EU Member State, the reporting obligations apply to the indirect customs representative in all cases.

For an importer established in an EU Member State, it will thus be possible to use different customs representatives for the customs declaration and CBAM reporting – for example, a direct customs representative makes the customs declaration, while an indirect customs representative is appointed to perform the CBAM reporting. In such cases, the direct representative should indicate the indirect customs representative in the customs declaration. However, there is no possibility during the transitional period to have more than one indirect customs representative for CBAM goods covered by the same customs declaration.

For an importer established outside the EU, the indirect customs representative will be responsible for both the customs declaration and the CBAM declaration.

What happens if an indirect customs representative does not agree to perform the CBAM reporting obligations?

This is only possible in cases where the importer is established in the EU. Conversely, if the importer is not established in the EU, the indirect customs representative must perform the CBAM reporting obligations.

Article 8.3 of the Implementing Regulation states that if indirect customs representatives do not agree to perform the CBAM reporting obligations, they must inform the importer to perform the reporting obligation.

If such notification is not made to the importer, the indirect customs representative remains responsible for the reporting obligation.

Can a direct customs representative be a CBAM reporting declarant for companies established on EU territory?

EU importers can indeed appoint direct or indirect customs representatives. However, the obligations regarding CBAM reporting (in accordance with the CBAM Regulation and the Implementing Regulation) fall either on the importer or on the indirect representatives, provided the indirect representatives accept such a task (for the transitional period, please refer to Article 32 of Regulation (EU) 2023/956).

Even if the importer appoints a direct customs representative, the importer remains responsible for the CBAM reporting obligations. In other words, the importer remains the declarant for CBAM purposes.

Nothing prevents importers from appointing service providers who can assist them in preparing and submitting CBAM reports in practice, but the responsibility for compliance with CBAM reporting obligations rests with the importers or, where appropriate, the indirect representatives, even in such cases.

Is there an obligation for customs representatives to check if their client is a CBAM registered declarant before lodging the customs declaration?

The submission of a customs declaration to customs authorities by a person (importer or customs representative) implies, in accordance with Article 15(2) of the Union Customs Code (UCC), that the person (a) is responsible for the accuracy and completeness of the information given in the declaration; (b) is responsible for the authenticity, validity, and effect of the documents supporting the declaration; and (c) is responsible for compliance with all the obligations relating to the placing of the goods under the customs procedure in question or to the execution of the authorized operations, where appropriate.

This also applies to the obligation to provide information in another form, which includes any information submitted to customs authorities. Based on the above, it is beneficial for the direct customs representative to check whether the person on whose behalf the declaration is submitted has fulfilled the requirements of the CBAM Regulation before submitting the customs declaration for the release for free circulation of CBAM goods.

My company is registered in an EU Member State but imports CBAM goods through multiple Member States. Should I aggregate these imports into a single quarterly report?

During the transitional period, the CBAM declarant is responsible for submitting quarterly CBAM reports containing information on the embedded emissions of all imported CBAM goods. CBAM goods are attributed to a CBAM declarant through the EORI number presented to the customs authorities. In the scenario provided, there is only one company and one EORI number, including for goods imported in different EU Member States. Therefore, the quarterly CBAM report should compile information on the embedded emissions of all CBAM goods imported by this company, even if the goods were imported in different EU Member States.

Importers may opt to appoint a third-party customs representative, and if that representative agrees to perform the reporting obligation, they must present their own EORI number during the import of the CBAM goods and fulfill the CBAM obligations on behalf of the importer for the import of those goods.

Should goods transiting between EU countries be reported under CBAM?

No. Only goods that are released for free circulation into the EU are subject to CBAM, not goods transiting within the EU.

If CBAM goods have entered into free circulation within the EU through a non-compliant EU customs procedure, and all duties and charges have already been paid through that non-compliant procedure, does the CBAM reporting obligation apply?

The release of the goods for free circulation requires that the CBAM requirements have been fulfilled. Therefore, checks on whether these requirements have been fulfilled should have taken place prior to the release of the goods for free circulation.

In the case of non-compliance, Article 198(1)(b) of the Union Customs Code applies (i.e., "customs authorities shall take all necessary measures, including seizure, sale, or destruction, where the goods cannot be released because they are subject to a prohibition or restriction"), as the goods are subject to CBAM requirements, and these requirements were not met.

In this case, Article 198(2) of the Union Customs Code also applies (i.e., "third-country goods abandoned to the State, seized, or liable to confiscation shall be deemed to be placed under the customs warehousing procedure").

Do I have to report CBAM goods under the inward processing regime?

CBAM only applies to goods released for free circulation in the EU. Thus, there is no CBAM obligation for CBAM goods placed under a customs suspension regime for subsequent export or processing for subsequent export.

However, if a CBAM good placed under inward processing is removed from the regime to be placed on the EU market, a CBAM obligation then arises.

Furthermore, a CBAM reporting obligation also arises in the specific case where a CBAM good placed under inward processing is under the inward processing regime and the final product is released for free circulation within the EU (Article 6 of the Implementing Regulation). In this specific case, the CBAM report shall include information about the quantities and embedded emissions of the CBAM goods placed under inward processing (Article 6(f) and (g) of the CBAM Regulation), but it will not include information about the quantities and embedded emissions of the final products released for free circulation, for example, because these products are themselves not CBAM goods (i.e., Article 6(a) and (b) do not apply).

Definitive Period

How will the CBAM work in the definitive period?

The CBAM will mirror the ETS based on certificates purchased by importers. The price of the certificates will be calculated based on the weekly average auction price of EU ETS allowances and expressed in $\text{€}$ per ton of $\text{CO}_2$ equivalent. Importers of goods will have to register, either individually or through a representative, to participate in the CBAM and purchase CBAM certificates. The certificates surrendered by the CBAM declarant must correspond to the quantity of embedded emissions of the respective goods, expressed in tons of $\text{CO}_2$. Furthermore, there is a possibility to buy certificates throughout the year.

CBAM certificates will be sold by each EU Member State to authorized CBAM declarants in that Member State. Only authorized CBAM declarants will be able to purchase certificates. These certificates must be surrendered by the CBAM declarant, for the first time in 2027, by May 31 for the embedded emissions of imports that took place in 2026, through the CBAM registry.

The declaration for embedded emissions is expected to be carried out only through the CBAM registry, an online portal, as during the transitional period.

What obligations will EU importers have regarding CBAM goods in the definitive period?

In the definitive period, only authorized CBAM declarants will be able to import goods into the EU (Article 4 of the CBAM Regulation). The authorized CBAM declarant, according to Article 5 of the CBAM Regulation, is:

• If the importer is not established in an EU Member State: the indirect customs representative;

• If the importer is established in an EU Member State: the importer or, by agreement, the indirect customs representative.

This means that if the importer is not established in an EU Member State and the indirect customs representative does not hold the status of an authorized CBAM declarant, the relevant CBAM goods cannot be imported into the EU.

Will you prohibit the import of CBAM goods after 2026 if the EU importer is not an authorized CBAM declarant?

Yes. Article 25 of the CBAM Regulation states that "customs authorities shall not allow the import of goods by any person other than an authorized CBAM declarant."

How is the CBAM declaration submitted in the definitive period?

The CBAM declaration is submitted by the authorized CBAM declarant via the CBAM Registry. For the definitive period, the 'CBAM Transitional Registry' will be replaced by the 'CBAM Registry'.

How do I access the CBAM Registry in the definitive period?

Once an importer's application is approved by the competent authority, they will be considered an authorized CBAM declarant. Each CBAM declarant will be assigned a CBAM account number by the Commission, which will allow access to the CBAM Registry.

What is the role of the European Commission in the definitive period?

As during the transitional period, the Commission will continue to manage the CBAM Registry, review the reported CBAM declarations, and communicate potential issues to the national competent authorities, and also continue to monitor the implementation of CBAM and the risk of circumvention.

Additionally, the Commission will manage a central platform for selling CBAM certificates to importers. Economic operators will be able to surrender the purchased CBAM certificates via this platform.

Will the EU extend the scope of CBAM?

At the end of the CBAM transitional period (by the end of 2025), the Commission will conduct a full review of the implementation of CBAM. Using the data collected during this period, it will carefully examine the possibility of extending the CBAM to other products and sectors covered by the EU ETS that are at risk of carbon leakage (see Article 30(2) of the CBAM Regulation). The extension of the CBAM scope would require a legislative proposal by the Commission and subsequent amendment of the CBAM Regulation, adopted by the European Parliament and the Council.

When is a CBAM declarant 'authorized' and what is the timeline for their authorization during the definitive period?

The competent authority in the Member State where the applicant is established grants the status of authorized CBAM declarant when the applicant meets the following criteria:

• They have not committed any serious infringement or repeated infringements of customs legislation, tax rules, market abuse rules, or the CBAM Regulation;

• They demonstrate their financial and operational capacity;

• They are established in the Member State in which the application is made;

• They have been assigned an EORI number.

A consultation process is required before authorization and should not exceed 15 working days. During the transitional period, the Commission will adopt secondary legislation with further details on the authorization procedure (see Article 17(10) of the CBAM Regulation).

How can EU importers take precautions to get the necessary information to use the new system correctly?

Producers outside the EU should provide information on CBAM-covered goods to their EU-registered importers. If this information is not available at the time the goods are imported, EU importers will be able to use default values to determine the quantity of certificates they need. However, it will be more advantageous for importers to provide the calculation of embedded emissions.

How will the reliability of the reported information be ensured?

The Commission, in cooperation with Member State authorities, will continuously monitor the reported emissions and related trade, detecting non-compliance with the CBAM Regulation and its secondary legislation, and circumvention practices. Furthermore, verifications will be carried out during the definitive period, and the report derived from these will contain information on the quantity of emissions and how these emissions have been attributed to different products.

During the definitive period, the reported embedded emissions must be verified by a verifier, accredited in accordance with verification rules (to be laid down by the Commission during the transitional period). This verifier will prepare a verification report. Based on these verifications, the CBAM declarations will be submitted along with copies of the emissions verification reports.

Penalties will be applied when a CBAM declarant introduces goods into the customs territory of the Union without complying with the obligations laid down in the Regulation.

How will the accreditation of verifiers work?

The European Commission will work on secondary legislation during the transitional period that will lay down the rules for accreditation and verification. Such legislation will include: firstly, two implementing acts, one setting out the verification principles in accordance with Articles 8 and 18 of the CBAM Regulation and another one concerning the alignment of the verification scopes of the EU ETS and CBAM; and secondly, a delegated act in accordance with Article 18 of the CBAM Regulation setting out the conditions for the accreditation of verifiers.

How will free allocation be incorporated into the calculation of the CBAM levy due?

Rules on this matter will be developed by the European Commission, following the authorization of Article 31 (2) of the CBAM Regulation.

How will the carbon price paid in a third country be deducted from the CBAM?

An authorized CBAM declarant should request a reduction in the number of CBAM certificates to be surrendered corresponding to the carbon price already effectively paid in the country of origin for the declared embedded emissions of the CBAM goods. The CBAM Regulation defines the carbon price quite broadly as "the monetary amount paid in a third country, under a carbon emissions trading scheme in the form of emissions allowances, or a tax, levy or fee."

Only the carbon price effectively paid in the country of origin will count towards the reduction of the number of CBAM certificates. If the authorized CBAM declarant benefits from any rebate or any other form of compensation, this benefit will be taken into account when determining the carbon price effectively paid.

The Commission will devise an implementing act before the end of the transitional period in 2025, which will specify additional details concerning the calculation of the carbon price effectively paid in the country of origin (see Article 9(4) of the CBAM Regulation).